Obamacare forces an election about centralized government

Wednesday

On May 23-24, 1865, the victorious Union armies marched through Washington. The columns of troops stretched back 25 miles. They marched as a single mass, clad in blue, their bayonets pointing skyward.

As Wilfred McClay wrote in his book, "The Masterless," spectators were transfixed and realized that the war had changed them. These troops had gone to war as a coalition of states, with different uniforms in different colors. But they came back as a centralized unit, with a national identity and consciousness.

U.S. history can be seen as a series of centralizing events -- the Civil War, World Wars I and II, the Progressive Era, the New Deal and the Great Society.

Many liberals have tended to look at this centralizing process as synonymous with modernization -- as inevitable and proper. As problems like inequality get bigger, government has to become more centralized to deal with them. As corporations grow, government has to grow to counterbalance them.

Many conservatives have looked at these inexorable steps toward centralization with growing alarm. Complicated problems, many have argued, are best addressed by local people on the ground. Centralized government inevitably leads to oligarchic government. The virtue of the citizenry depends on local control, personal initiative and intimate connections. These things are being bleached away.

The Obama health care law represents another crucial moment in the move toward centralization. With its state insurance exchanges, Obamacare is not as centralized as a single-payer system. Still, it centralizes authority in at least four ways.

First, while government has always had the power to regulate contracts and business activity, Obamacare compels people to enter into activity so that it can regulate them. This new ability to compel activity opens up vast new powers.

Second, Obamacare centralizes Medicare decisions -- and the power of life and death -- within an unelected Independent Payment Advisory Board. Fifteen experts are charged with controlling costs from the top down.

Third, Obamacare would continue the centralization of the nation's resources -- absorbing an estimated $1.76 trillion over the next 10 years.

Finally, it would effectively make health care a political responsibility. When you go to a campaign town hall in, say, Britain, you discover that many of the questions are about why somebody's back or dental surgery didn't go well and what the candidate can do to fix it. Once voters assume that national politicians are responsible for their health care, national politicians become more active in running the health system.

So this is a big moment. Obamacare forces us again to have an election about how centralized government should be.

Those of us in the Hamiltonian tradition sit crossways in this debate. Alexander Hamilton was not shy about concentrating power in Washington if he thought centralized authority was necessary to achieve national goals. On the other hand, he did not believe central decision-makers had the ability to direct an infinitely complex and changing world. He centralized goal-setting while decentralizing decision-making.

In that tradition, my own view is that the individual mandate is perfectly acceptable policy. We effectively have a national health care system. We all indirectly pay for ill, uninsured people who show up at emergency rooms. If all Americans are in the same interconnected health care system, I think it's reasonable for government to insist that all Americans participate in the insurance network that is the payment method for that system.

But I think the Obama administration made a disastrous error in centralizing so many of the cost-control elements of the new health care system. I don't care how many comparative effectiveness research studies they commission, there is no way centralized dirigistes can keep up with a complex, innovative system. There is no way government can adapt quickly to failure.

There is no way planners can know how many employers will drop coverage, how many doctors will refuse to see patients in expanded Medicaid, how to write uniform rules governing the state insurance exchanges, how many people will or won't enter high-risk pools, how Congress will undermine any painful cuts the executive branch does make, how doctors will evade efforts to control their revenue, how doctor shortages will pop up, how spending is best controlled.

From a Hamiltonian perspective, the decentralized premium support model is a better way to control costs: Government insists everybody has coverage but then encourages companies, families and Medicare beneficiaries to engage in a regulated process of discovery to find the best care at the lowest cost.

So, yes, let's have another round in the debate about how centralized U.S. government should be. Let's watch liberals and conservatives duke it out. But remember there has always been a Hamiltonian alternative: Centralize the goals, but decentralize the means people take to get there. Universal coverage is a worthy goal. Decentralized competition is the way to make it affordable.

THE NEW YORK TIMES

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